Hungary Defends Tax Strategy

Hungary’s Economy Minister announced that consumption taxes will rise and income tax will decrease. These measures are the part of a strategy to keep the state budget deficit below 3% of GDP.

After the Minister’s announcement the International Monetary Fund’s representative in Hungary stated that those government’s measures were contrary to IMF and EU recommendations. Currently Hungary is seeking financial assistance in the amount of EUR 15 bln.

The Erste Group Bank, which is Hungary’s second-biggest lender, also expressed its concern about new tax measures. According to the bank’s CEO Andreas Treichl, the Hungarian government is changing its taxation legislation too often.

However, at an event organized by the American Chamber of Commerce in Budapest, the Hungarian Minister of Economy stated that the country’s budget has been consolidated and unemployment and government debt have been reduced. Current policy of the Hungarian government is to defend flat taxes and to avoid sharp spending cuts to reduce the deficit.